108 THE WORK OF THE STOCK EXCHANGE

country. It is also this floating supply which lends negotiability
 to the security, since any investor can at any time add to
it by sales or subtract from it by purchases.

Time Needed to Complete Distribution.—The size as well
as the attractiveness of the particular security issue also does
much to determine how long its distribution among investors
will take. Naturally, other factors being equal, it takes longer
to distribute a large issue than a small issue, simply because
there is more of it. Distribution, as a rule, is effected most
quickly in the case of a small and attractive bond issue, and
most slowly in the case of a large issue of new and speculative
common stock. Furthermore, the floating supply of the average
 bond, because of its greater certainty of income to investors,
 etc., is usually reduced to smaller proportions than that
of the average stock. This is one reason why the bond market
is as a rule less active than the stock market, and also why many
listed bonds are harder to buy or sell quickly than most listed
stocks.?? The floating supply of bonds, as well as of stocks,
however, will increase when some doubt springs up as to their
value or price, and with a larger floating supply their market
tends to become more active.
The relative size of a security issue’s floating supply changes
over long periods principally according to the success of the
enterprise, and over short periods mainly according to its price
movements.

As the stock of a successful company becomes “seasoned”
over the course of years, there is a continued “secular” tendency
for investors to acquire its shares from the speculating holders
of the floating supply. Under such circumstances, and especially
 when attendant conditions are stable, the stock passes
from a speculative into an investment stage as the floating
supply decreases. Many years, however, may elapse before
this process of distribution approaches relative completion and
Tm See Chapter X, p. 255.